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Technology Stocks : Intel Corporation (INTC)
INTC 39.17+6.1%1:01 PM EST
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To: AK2004 who wrote (13572)3/9/1997 2:01:00 PM
From: Brian Malloy   of 186894
 
Albert,

1. In a world where demand is growing at a rate faster than supply you do not necessarily loose market share. Your market share can stay the same and you will still make money, in fact one could even loose some market share and still make more money.

2. AMD has two chip plants. They have not announced plans to build any more. INTEL has at least three new plants under construction and more on the way. Therefore, AMDs capacity is fixed. Intel's capacity is expanding.

3. AMD with the introduction of its new chip if it ships on time and there are no problems with the chip will cause earnings to rise at AMD. However, INTEL will sell more chips as it contiues to bring new fabs on line so it will earn more as well.

4. However, because INTEL is increasing chip production at a much faster rate than AMD ever will, INTEL is the company that is and will continue to gain market share.

5. Given a choice, the corporation that can increase revenue while increasing production and gain market share (INTEL) is in a much stronger position than a company (like AMD) which can increase revenue while production levels remain relatively constant and looses market share. The company with the dominant strategy wins. INTEL has the dominant strategy.

Brian Malloy
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